October 2013 | Issue Brief

The Coverage Gap: Uninsured Poor Adults in States that Do Not Expand Medicaid
The expansion of Medicaid eligibility to nearly all low-income adults is a core component of the coverage provisions in the 2010 Affordable Care Act (ACA). The ACA Medicaid expansion provides a link between new private coverage options available through either Health Insurance Marketplaces or employers and the existing Medicaid program, which previously had many gaps in coverage for adults. Historically, Medicaid eligibility generally was restricted to low income individuals in a specified category, such as children, their parents, the aged, or individuals with disabilities. In most states, adults without dependent children were not eligible for Medicaid. Further, eligibility levels for parents were generally set very low and varied greatly across states. As a result, only 30% of poor nonelderly adults had Medicaid coverage in 2012, compared to 70% of poor children, and uninsured rates for poor adults (42%) were well over twice the national average (18%). 1 The expansion of Medicaid, effective in January 2014, fills in historical gaps in Medicaid eligibility for lowincome adults and has the potential to extend Figure 1 Status of State Medicaid Expansion Decisions, as of health coverage to millions of currently uninsured September 30, 2013 individuals. This expansion essentially sets a VT WA ME national Medicaid income eligibility level of 138% MT ND NH MN MA NY OR of poverty (about $27,000 for a family of three2) WI SD ID MI RI
2 2 1

for adults. The expansion was intended to be national and to be the vehicle for covering lowincome individuals, with premium tax credits for Marketplace coverage serving as the vehicle for covering people with higher incomes. However, the June 2012 Supreme Court ruling made the expansion of Medicaid optional for states, and as of September 2013, 26 states did not plan to implement the expansion (Figure 1).

WY

NV CA

NE UT CO KS OK

IA1 IL MO AR1 MS LA IN

PA1 OH WV KY TN1 AL GA VA NC SC

CT NJ DE MD

DC

AZ

NM TX HI

AK

FL2

Moving Forward at this Time (25 States including DC) Not Moving Forward at this Time (26 States)
NOTES: 1 - Exploring an approach to Medicaid expansion likely to require waiver approval. 2- Discussion of a special session being called on the Medicaid expansion. SOURCES: SOURCES: States decisions on the Medicaid expansion as of September 30, 2013. Based on data from the Centers for Medicare and Medicaid Services, available at: http://medicaid.gov/AffordableCareAct/Medicaid-Moving-Forward-2014/Medicaid-and-CHIP-EligibilityLevels/medicaid-chip-eligibility-levels.html.

In states that do not expand Medicaid, over five million poor uninsured adults have incomes above Medicaid eligibility levels but below poverty and may fall into a coverage gap of earning too much to qualify for Medicaid but not enough to qualify for Marketplace premium tax credits. Most of these people have very limited coverage options and are likely to remain uninsured. This brief describes the coverage gap and presents estimates of the population that falls into this situation. An overview of the methodology underlying the analysis can be found in the Methods box at the end of the report, and more detail is available in the accompanying Technical Appendices.

Effective January 2014, the ACA establishes a new minimum Medicaid eligibility level of 138% of poverty for non-disabled adults who were not previously eligible for the program. As with current Medicaid, legal immigrants who have been in the country for five years or less and immigrants who are not lawfully present are not eligible for this coverage. The federal government will finance the full cost of the Medicaid expansion for the first three years (2014-2016); after that, the federal governments share of costs will phase down, reaching 90% in 2020. Nationally, 17 million currently uninsured nonelderly adults may meet the income and citizenship criteria to be eligible for Medicaid after the expansion. 3 The number of eligible individuals varies by state, reflecting the income and age distribution in the state as well as the current scope of insurance coverage. Many of the 25 states moving forward with the Medicaid expansion already offer coverage for parents up to poverty, but adults without dependent children are generally ineligible (see Figure 2). In these states, the expansion extends Medicaid eligibility to all parents and other adults up to the new Medicaid limit. For people with incomes above that limit, other provisions of the ACAparticularly the availability of premium tax credits to purchase individual coverage through the Health Insurance Marketplaceswill facilitate access to affordable coverage.
Figure 2

THE ACA MEDICAID EXPANSION & THE COVERAGE GAP

Median Medicaid Eligibility Limits for Adults as a Percent of the FPL, January 2013 and January 2014
Jan. 2013 138% 106% 138% Jan. 2014

49% 47% 0%
(In a family of 3)

0%
(In a family of 3)

0%

Parents

Other Adults
(for an individual)

Parents

Other Adults
(for an individual)

States Moving Forward with the Medicaid Expansion at this Time (25 states)

States NOT Moving Forward with the Medicaid Expansion at this Time (26 states)

SOURCE: Eligibility data for January 2013 based on the results of a national survey conducted by the Kaiser Commission on Medicaid and the Uninsured and the Georgetown University Center for Children and Families, 2013. Status of Medicaid expansion decisions and 2014 eligibility levels based on data from the Centers for Medicare and Medicaid Services, available at: http://www.medicaid.gov/AffordableCareAct/MedicaidMoving-Forward-2014/Medicaid-and-CHIP-Eligibility-Levels/medicaid-chip-eligibility-levels.html

In most states that do not expand Medicaid, however, many people will be left without an affordable coverage option. Medicaid eligibility for adults in states not moving forward with the ACA Medicaid expansion is limited. As of January 2014, the median eligibility level for parents in states not moving forward will be just 47% of poverty, or about $9,400 a year for a family of three (Figure 2). Only four states not expanding Medicaid (Alaska, Maine, Tennessee, and Wisconsin) cover parents up to at least poverty (see Table 1), and eligibility limits in some states are less than 20% of the poverty level (16% in Alabama, 19% in Texas). Of the states not moving forward with the expansion, only Wisconsin provides Medicaid coverage to adults without dependent children. 4

The Coverage Gap: Uninsured Poor Adults in States that Do Not Expand Medicaid

Table 1: Medicaid Adult Income Eligibility Limits as a Percent of the Federal Poverty Level in States Not Moving Forward with the ACA Medicaid Expansion, January 2014 Parents of Dependent Children Other Adults (Non- Disabled) (in a family of three) (for an individual) As a share of As an annual income As a share of As an annual income poverty limit poverty limit Median 47% $ 9,245 0% 0% Alabama 16% $ 3,221 0% $ 0 Alaska 128% $ 31,245 0% $ 0 Florida 35% $ 6,809 0% $ 0 Georgia 39% $ 7,589 0% $ 0 Idaho 5 27% $ 5,357 0% $ 0 Indiana5 24% $ 4,697 0% $ 0 Kansas 38% $ 7,421 0% $ 0 Louisiana5 24% $ 4,685 0% $ 0 Maine5 105% $ 20,513 0% $ 0 Mississippi 29% $ 5,669 0% $ 0 Missouri5 24% $ 4,661 0% $ 0 Montana5 52% $ 10,109 0% $ 0 Nebraska 55% $ 10,817 0% $ 0 New Hampshire 75% $ 14,645 0% $ 0 North Carolina 45% $ 8,861 0% $ 0 Ohio5 95% $ 18,557 0% $ 0 Oklahoma5 48% $ 9,377 0% $ 0 Pennsylvania 38% $ 7,421 0% $ 0 South Carolina 67% $ 13,085 0% $ 0 South Dakota 54% $ 10,529 0% $ 0 Tennessee 111% $ 21,677 0% $ 0 Texas 19% $ 3,737 0% $ 0 Utah5 47% $ 9,113 0% $ 0 Virginia 52% $ 10,121 0% $ 0 Wisconsin5 100% $ 19,529 100% $ 11,490 Wyoming 59% $ 11,453 0% $ 0
NOTE: Reflects eligibility levels for MAGI groups, including 5 percentage point income disregard. For more detail on who is included in MAGI groups, see: Kaiser Commission on Medicaid and the Uninsured. Medicaid Eligibility, Enrollment Simplification, and Coordination under the Affordable Care Act: A Summary of CMSs March 23, 2012 Final Rule. December 2012, available at: http://www.kff.org/medicaid/issue-brief/medicaid-eligibility-enrollment-simplification-and-coordination-under-the-affordable-careact-a-summary-of-cmss-march-23-2012-final-rule/ SOURCE: Status of Medicaid expansion decisions and 2014 eligibility levels based on data from the Centers for Medicare and Medicaid Services, available at: http://medicaid.gov/AffordableCareAct/Medicaid-MovingForward-2014/Medicaid-and-CHIP-Eligibility-Levels/medicaid-chip-eligibility-levels.html.

The ACA envisioned people below 138% of poverty receiving Medicaid and thus does not provide premium tax credits for the lowest income. As a result, individuals below poverty are not eligible for Marketplace tax credits, even if Medicaid coverage is not available to them. Individuals with incomes above 100% of poverty in states that do not expand may be eligible to purchase subsidized coverage through the Marketplaces; however, only about a third of uninsured adults (3.2 million people) who could have been eligible for Medicaid if their state expanded fall into this income range. Thus, there will be a large gap in coverage for adults in states that do not expand Medicaid (Figure 3).

Figure 3

In states that do not expand Medicaid under the ACA, there will be large gaps in coverage available for adults.

47% FPL)

NOTE: Applies to states that do not expand Medicaid. In most states not moving forward with the expansion, adults without children are ineligible for Medicaid .

The Coverage Gap: Uninsured Poor Adults in States that Do Not Expand Medicaid

Nationally, over five million poor uninsured adults will fall into the coverage gap that results from state decisions not to expand Medicaid (Figure 4 and Table 2), meaning their income is above current Medicaid eligibility but below the lower limit for Marketplace premium tax credits. These individuals would have been newly-eligible for Medicaid had their state chosen to expand coverage. A fifth of people in the coverage gap reside in Texas, which has both a large uninsured population and very limited Medicaid eligibility (Figure 4). Fifteen percent live in Florida, eight percent in Georgia, six percent live in North Carolina, and another six percent live in Ohio.
Figure 4

ESTIMATES OF PEOPLE IN THE COVERAGE GAP

Without Medicaid expansion, 5.2 million uninsured nonelderly adults below poverty may fall into the coverage gap.
Ohio 6% NC 6% GA 8% FL 15% TX 20% Other States Not Moving Forward 51%

5.2 Million Uninsured

Notes: Excludes legal immigrants who have been in the country for five years or less and immigrants who are not lawfully present. The poverty level for a family of three in 2013 is $19,530. Source: Kaiser Family Foundation analysis based on 2014 Medicaid eligibility levels and 2012-2013 Current Population Survey. See Methods Box for more detail.

The population in the coverage gap represents over a quarter (27%) of the uninsured adult population in states that are not expanding Medicaid (Table 2). This share ranges across states, from a low of 18% in Alaska to a high of 37% in Mississippi. This variation reflects not only variation in Medicaid eligibility but also variation in the income distribution of the uninsured by state. There are no uninsured adults in the coverage gap in Wisconsin because the state will provide Medicaid eligibility to adults up to the poverty level in 2014. Looking only at uninsured adults below 139% of poverty in non-expansion states the income range originally targeted for the Medicaid expansion about half fall into the coverage gap. The remaining share either may be eligible for Medicaid under non-expansion rules or could receive tax credits to purchase coverage in the Marketplace. The share of the Medicaid-target population that falls into the coverage gap varies by state, from 40% in Alaska (again, 0% in Wisconsin) to 65% in Oklahoma.

The Coverage Gap: Uninsured Poor Adults in States that Do Not Expand Medicaid

Table 2: Number of Poor Uninsured Nonelderly Adults in the ACA Coverage Gap, by State Number As a Share of All As a Share of LowAs a Share of Poor in Uninsured Income (< 139% FPL) (< 100% FPL) State Coverage Nonelderly Adults Uninsured Nonelderly Uninsured Nonelderly Gap in State Adults in State Adults in State Total in states not moving 5,161,820 27% 56% 86% forward with Medicaid expansion Alabama 191,320 36% 63% 88% Alaska 17,290 18% 40% 67% Florida 763,890 27% 58% 90% Georgia 409,350 31% 60% 85% Idaho 54,780 30% 60% 91% Indiana 181,930 28% 56% 88% Kansas 77,920 29% 55% 84% Louisiana 242,150 34% 60% 87% Maine 24,390 22% 57% 87% Mississippi 137,800 37% 61% 89% Missouri 193,420 30% 61% 87% Montana 40,140 27% 56% 85% Nebraska 32,570 20% 52% 84% New Hampshire 26,190 20% 54% 88% North Carolina 318,710 28% 58% 91% Ohio 330,240 28% 55% 82% Oklahoma 144,480 28% 65% 90% Pennsylvania 281,290 25% 56% 88% South Carolina 194,330 33% 59% 86% South Dakota 25,480 29% 56% 85% Tennessee 161,650 24% 47% 74% Texas 1,046,430 27% 56% 91% Utah 57,850 21% 55% 88% Virginia 190,840 25% 55% 89% Wisconsin Wyoming 17,390 23% 59% 69% Note: Excludes undocumented immigrants and legal immigrants who have been in the US for <5 years. Source: KFF analysis of March 2012 and 2013 CPS and Medicaid MAGI eligibility levels. See Methods Box for more detail.

The Coverage Gap: Uninsured Poor Adults in States that Do Not Expand Medicaid

Among poor uninsured adults, the share that falls into the coverage gap varies across states, reflecting both Medicaid eligibility levels and the income distribution of adults below poverty (Table 1 and Figure 5). Nationally, 86% of poor uninsured adults in states not expanding are ineligible for Medicaid. The share of poor uninsured adults in the gap ranges from a high of 91% in Idaho, North Carolina and Texas to 67% in Alaska. However, in most states not moving forward with the ACA Medicaid expansion, the vast majority of poor adults will remain ineligible for Medicaid coverage. Some of those who are eligible for Medicaid but not currently enrolled may take up coverage as a result of new outreach under the ACA; however, many are likely to remain uninsured.
Figure 5

Medicaid Eligibility for Poor Uninsured Nonelderly Adults In States Not Expanding Medicaid, as of 2014
Share who are:
Eligible for Medicaid in 2014*
TOTAL Alabama Alaska Florida Georgia Idaho Indiana Kansas Louisiana Maine Mississippi Missouri Montana Nebraska New Hampshire North Carolina Ohio Oklahoma Pennsylvania South Carolina South Dakota Tennessee Texas Utah Virginia Wisconsin Wyoming

In the Coverage Gap

0%

20%

40%

60%

80%

100%

* Based on current Medicaid eligibility rules converted to MAGI. Applies only to MAGI populations. Notes: Excludes legal immigrants who have been in the country for five years or less and immigrants who are not lawfully present. Source: Kaiser Family Foundation analysis based on 2014 Medicaid eligibility levels and 2012-2013 Current Population Survey. See Methods Box for more detail.

The Coverage Gap: Uninsured Poor Adults in States that Do Not Expand Medicaid

CONCLUSION

The ACA was passed with the goal of filling in gaps in the availability of affordable health coverage in the United States. Given particularly high uninsured rates for adults living below poverty, the expansion of Medicaid to all adults up to 138% of poverty is a key component of this effort. In states that expand their Medicaid programs, millions of adults will gain Medicaid coverage under the law. However, with many states opting not to implement the Medicaid expansion, millions of adults will remain outside the reach of the ACA and continue to have limited, if any, option for health coverage: most do not have access to employer-based coverage through a job, few can afford coverage on their own, and most are currently ineligible for public coverage in their state. While a small share may be eligible to purchase subsidized coverage through the new Health Insurance Marketplaces, most have incomes below the poverty level and thus will be ineligible for these premium tax credits. It is unlikely that people who fall into the coverage gap will be able to afford Marketplace coverage: The national average premium for a 40-year-old individual purchasing coverage through the Marketplace is $270 per month for a silver plan and $224 per month for a bronze plan, 6 which equates to about half of income for those at the lower income range of people in the gap and about a quarter of income for those at the higher income range of people in the gap. Further, people in the coverage gap are ineligible for costsharing subsidies for Marketplace plans and may face additional out-of-pocket costs up to $6,350 a year if they were to purchase Marketplace coverage. Given the limited budgets of people in the coverage gap, these costs are likely prohibitively expensive. People in the coverage gap are likely to face barriers to needed health services or, if they do require medical care, potentially serious financial consequences. Further, the safety net of clinics and hospitals that has traditionally served the uninsured population will continue to be stretched in these states. Notably, there is no deadline for state decisions about implementing the Medicaid expansion. Millions will be helped by the insurance provisions in the law; however, more than five million poor adults in states not expanding Medicaid coverage will be ineligible for assistance, while millions more who earn more than they do will receive tax credits to help them pay for coverage in the new insurance Marketplaces. The number and distribution of this population by state will be the subject of a forthcoming Kaiser Family Foundation report.

The Coverage Gap: Uninsured Poor Adults in States that Do Not Expand Medicaid

Methods This analysis uses pooled data from the 2012 and 2013 Current Population Survey (CPS) Annual Social and Economic Supplement (ASEC). The CPS ASEC provides socioeconomic and demographic information for the United Sates population and specific subpopulations. Importantly, the CPS ASEC provides detailed data on families and households, which we use to determine income for ACA eligibility purposes (see below for more detail). We merge two years of data in order to increase the precision of our estimates. Medicaid and Marketplaces have different rules about household composition and income for eligibility. For this analysis, we calculate household membership and income for both Medicaid and Marketplace premium tax credits for each person individually, using the rules for each program. For more detail on how we construct Medicaid and Marketplace households and count income, see the detailed technical Appendix A available at here. Immigrants who are not lawfully present are ineligible for Medicaid and Marketplace coverage. Since CPS data do not directly indicate whether an immigrant is lawfully present, we impute documentation status for each person in the sample. To do so, we draw on the methodology in the State Health Access Data Assistance Center (SHADAC) paper, State Estimates of the LowIncome Uninsured Not Eligible for the ACA Medicaid Expansion. This approach uses the Survey of Income and Program Participation (SIPP) to develop a model that predicts immigration status; it then applies the model to CPS, controlling to statelevel estimates of total undocumented population from Department of Homeland Security. For more detail on the immigration imputation used in this analysis, see the technical Appendix B available at here. As of January 2014, Medicaid financial eligibility for most nonelderly adults will be based on modified adjusted gross income (MAGI). To determine whether each individual is eligible for Medicaid, we use each states MAGI eligibility level that will be effective as of 2014. Some nonelderly adults with incomes above MAGI levels may be eligible for Medicaid through other pathways; however, we only assess eligibility through the MAGI pathway.
9 8 7

An individuals income is likely to fluctuate throughout the year, impacting his or her eligibility for Medicaid. Our estimates are based on annual income and thus represent a snapshot of the number of people in the coverage gap at a given point in time. Over the course of the year, a larger number of people are likely to move and out of the coverage gap as their income fluctuates.

Urban Institute and Kaiser Commission on Medicaid and the Uninsured analysis based on the Census Bureau's March 2013 Current Population Survey (CPS: Annual Social and Economic Supplements). The 2013 federal poverty guideline for a family of three was $19,530. See: http://aspe.hhs.gov/poverty/13poverty.cfm
3 2

Some of these states currently provide more limited benefits than Medicaid to childless adults under Section 1115 Medicaid waiver demonstration authority. Wisconsin extends Medicaid to childless adults with incomes up to 100% FPL. January 2014 eligibility limits in Idaho, Indiana, Louisiana, Maine, Missouri, Montana, Ohio, Oklahoma, Utah, and Wisconsin reflect coverage under the Medicaid state plan. These states have additional coverage for parents or other adults above state plan limits through a section 1115 demonstration or a pending demonstration proposal. The demonstrations include limits on eligibility and/or benefits, do not offer coverage to all residents of the state, and/or include an enrollment cap.
6 5

Kaiser Family Foundation analysis of March 2013 Current Population Survey. See Methods Box for more detail.
4

The methods for arriving at this estimate can be found on the Kaiser Family Foundation Subsidy Calculator, (available here: http://www.kff.org/interactive/subsidy-calculator/). The calculator is based on Congressional Budget Office (CBO) projections from July 2012 (Available here: http://www.cbo.gov/sites/default/files/cbofiles/attachments/43472-07-24-2012-CoverageEstimates.pdf)
7

State Health Access Data Assistance Center. 2013. State Estimates of the Low-income Uninsured Not Eligible for the ACA Medicaid Expansion. Issue Brief #35. Minneapolis, MN: University of Minnesota. Available at: http://www.rwjf.org/content/dam/farm/reports/issue_briefs/2013/rwjf404825.
The Coverage Gap: Uninsured Poor Adults in States that Do Not Expand Medicaid 8

Non-MAGI pathways for nonelderly adults include disability-related pathways, such as SSI beneficiary; Qualified Severely Impaired Individuals; Working Disabled; and Medically Needy. We are unable to assess disability status in the CPS sufficiently to model eligibility under these pathways. However, previous research indicates high current participation rates among individuals with disabilities (largely due to the automatic link between SSI and Medicaid in most states, see Kenney GM, V Lynch, J Haley, and M Huntress. Variation in Medicaid Eligibility and Participation among Adults: Implications for the Affordable Care Act. Inquiry. 49:23153 (Fall 2012)), indicating that there may be a small number of eligible uninsured individuals in this group. Further, many of these pathways (with the exception of SSI, which automatically links an individual to Medicaid in most states) are optional for states, and eligibility in states not implementing the ACA expansion is limited. For example, the median income eligibility level for coverage through the Medically Needy pathway is 15% of poverty in states that are not expanding Medicaid, and most states not expanding Medicaid do not provide coverage above SSI levels for individuals with disabilities. (See: OMally-Watts, M and K Young. The Medicaid Medically Needy Program: Spending and Enrollment Update. (Washington, DC: Kaiser Family Foundation), December 2012. Available at: http://www.kff.org/medicaid/issue-brief/the-medicaid-medically-needyprogram-spending-and/. And Kaiser Commission on Medicaid and the Uninsured, Medicaid Financial Eligibility: Primary Pathways for the Elderly and People with Disabilities, February 2010. Available at: http://www.kff.org/medicaid/issue-brief/medicaid-financial-eligibility-primary-pathways-for-the-elderlyand-people-with-disabilities/.
9

Kaiser Commission on Medicaid and the Uninsured. Fact Sheet: Medicaid Eligibility for Adults as of January 1, 2014. (Washington, DC: Kaiser Family Foundation), October 1, 2014. Available at: http://www.kff.org/medicaid/fact-sheet/medicaid-eligibility-for-adults-as-of-january-1-2014/.

The Coverage Gap: Uninsured Poor Adults in States that Do Not Expand Medicaid